4财务管理专业英语

1、4. Financial Ratio Analysis4.1 Financial Ratio Analysis 财务比率分析4.2 Liquidity Ratios 流动性比率4.3 Debt Management Ratios 债务管理比率4. Financial Ratio Analysis4.4 Asset Management Ratios 资产管理比率4.5 Profitability Ratios 盈利比率4.6 Market Value Ratios 市场价值比率4. Financial Ratio Analysis4.7 Uses and Limitations of Fina

2、ncial Ratio Analysis 财务比率分析的使用和限制Analyzing Financial RatiosSome preliminary comments are warranted:1. Financial ratios are not standardized.Analyzing Financial Ratios2. Analyzing a single financial ratio for a given year may not be very useful.Analyzing Financial Ratios3. Some of a firms financial a

3、ccounting practices or choices will affect its financial statements and, finally, its financial ratios.Analyzing Financial Ratios4. Financial ratios do not provide analysts with all of the answers about a firms condition. 4.2 Liquidity RatiosLiquidity ratios indicate a firms ability to pay its oblig

4、ations in the short run.4.2 Liquidity RatiosFinancial managers must pay close attention to liquidity ratios to ensure they reflect a high probability of the firm being able to promptly and fully pay its bills without undue stress.4.2 Liquidity RatiosNet working capital to total assets ratio= Net wor

5、king capital Total assets净营运资本比总资产比率4.2.1 Current ratioDenominator 分母 Numerator 分子4.2.1 Current ratioFor example, a current ratio of 1.5 implies that a firm has $1.5 in current assets for every $1 in current liabilities and thus has 1.5 times the current assets, or has its current liabilities covere

6、d 1.5 times over.4.2.1 Current ratioExcessively high current ratios, however, may indicated a firm may have too much of its long-term investor-supplied capital invested in short-term low-earning current assets.4.2.1 Current ratioIn an inflationary environment, firms that use last-in, first-out (LIFO

7、) inventory valuation will likely have lower current ratios than firms that use first-in, first-out (FIFO).4.2.1 Current ratioWith LIFO inventory valuation, firms determine the value of cost of goods sold on the income statement by the cost of the inventory most recently produced;4.2.1 Current ratio

8、Except in some declining cost industries, inflation will likely cause the value of this “older” inventory carried on the balance sheet to be less than the more recent cost of producing that inventory.4.2.1 Current ratioThe value of inventory reported on the balance sheet is from more recent periods

9、and will be based on more recent (higher) cost data than the inventory balance of similar firms that use LIFO.4.2.1 Current ratioYet, if a firm has a current ratio that is less than one, the same transaction would lead to a lower current ratio.4.2.1 Current ratioEqual absolute changes in the numerat

10、or and denominator may lead to apparent improvements or deterioration in ratios that do not reflect real changes in performance.4.2.1 Current ratioAnalysts should be aware that a firms managers may undertake year-end transactions, such as the one described above, to make certain ratios appear better

11、 following a period of disappointing performance.4.2.1 Current ratioOne of the firms may have a substantial portion of its current assets tied up in inventories, while the other firm may have large cash and marketable securities.Latter Did he walk or swim? The latter seems unlikely.4.2.1 Current rat

12、ioManagers or analysts can examine a firms common-size balance sheet over time to see relative changes in the composition of both current assets and current liabilities and assess changes or differences in liquidity.4.2.2 Quick ratio4.2.2 Quick ratioThe rationale for excluding inventory is that it i

13、s the least liquid of a firms current assets and may not be as readily available to meet a short-term maturing obligation as the other more liquid current assets.4.2.2 Quick ratioFor any firm carrying an inventory balance, the quick ratio will be lower than the current ratio.For example, suppose a f

14、irms current ratio has been fairly stable and consistent with industry averages over the past three years. But during the same period, the firms quick ratio has declined and is now below industry averages.4.2.2 Quick ratioWhether the increase is likely temporary or permanentHow the firm finances the

15、 inventoryHow the relative increases in inventory will affect the firms liquidity and overall performance4.2.3 Cash ratio4.2.3 Cash ratioAnalyzing a cash ratio, however, could be helpful for assessing a firms liquidity when the firm needs to pay most or all of its current liabilities with cash in th

16、e near term.4.3 Debt Management RatiosDebt management ratios characterize a firm in terms of the relative mix of debt and equity financing and provide measures of the long-term debt paying ability of the firm. 4.3 Debt Management RatiosLeverage ratios: 324.3 Debt Management RatiosCoverage ratios: 33

17、4.3.1 Debt RatioCreditor prefer a low of moderate debt ratio because it provides more protection if the firm experiences financial problems.4.3.1 Debt Ratio354.3.2 Long-term Debt RatioLong-term debt ratio is computed by dividing a firms long-term debt, usually defined as all non-current liabilities,

18、 by its total assets.4.3.2 Long-term Debt RatioWhen computing the debt ratio and the long-term debt ratio, some managers and analysts use total capital in the denominator in place of total assets.4.3.2 Long-term Debt RatioDebt-to-total capital ratio = Total liabilities non-current liabilities + equi

19、ty4.3.2 Long-term Debt RatioLong-term debt to total capital ratio = Long-term debt non-current liabilities + equity4.3.2 Long-term Debt RatioLeverage ratios characterize a firm in terms of its relative amount of debt financing, but they do not indicate the firms ability to meet its debt obligations.

20、In fact, the possibility exists that a firm with a higher debt ratio could actually in a stronger position to service the firms debt due to stronger earnings and cash flows than a firm with a lower debt ratio and weaker earnings.4.3.3 Interest Coverage RatioThe ratio measures the extent to which ope

21、rating income can decline before the firm is unable to meet its annual interest cost.4.3.3 Interest Coverage RatioNote that earnings before interest and taxes, rather than net income, is used in the numerator because interest is paid with pre-tax dollars, and the firms ability to pay current interes

22、t is not affected by taxes.4.3.4 Cash Flow Coverage Ratio4.4 Asset Management RatiosThe accounts receivable turnover ratio is computed by dividing net credit sales by the average accounts receivable outstanding.Credit salesAccounts receivable XXX Sales XXXCash XXX Sales XXXNet salesNet sales = Sales

23、 - Sales returns and allowances - Sales discountCredit terms n / 30 n / 10 EOM 2 / 10， n / 60 2 / 10，1 / 15，n / 30Trade DiscountsList price / catalogue price-Trade discountActual price / invoice priceAccounts receivable turnover ratio=Managers should analyze the tradeoff between any increased sales

24、from a more lenient credit policy and the associated costs of longer collection periods and more uncollected receivables to determine whether changing the firms credit sales policy could increase shareholders wealth.Write off receivables-(1)Bad debt expense 1000 Allowance for doubtful accounts 1000W

25、rite off receivables-(2)Current assets:Accounts receivable $ 10000 Less:Allowance for doubtful accounts (1000) $9000Write off receivables-(3)Allowance for doubtful accounts Accounts receivable-XX举 例AgePercent uncollectible030 days2%3160 days4%6190 days10%Over 90 days30% Collection period=365 account

26、s receivable Turnover ratioCollection period= 365credit sales / average accounts receivable= Average accounts receivable Credit sales / 3654.4.2 Inventory Turnover ratio举 例Accounts receivable 1000 Sales 1000Cost of goods sold 650 Merchandise inventory 650A low, declining ratio may suggest the firm h

27、as continued to build up inventory in the face of weakening demand or may be carrying and reporting outdated or obsolete inventory that could only be sold at reduced prices, if at all.On the other hand, a manager or analyst should check to make sure that a high ratio does not reflect lost sales oppo

28、rtunities because of inadequate inventory levels caused by production problems, poor sales forecasting, or weak coordination between sales and production activities within the firm.Inventory processing period= 365 inventory turnover ratioThe number of days sales in inventory 存货周转天数The number of days

29、 sales in inventory：存货周转天数365 / inventory turnover365 Cost of goods sold Average inventoryAverage inventory Cost of goods sold / 365Accounts payable turnover ratio=4.4.3Accounts payable payment period=4.4.3When a firm produces goods or acquires inventory for the sale and/or sells the items on a cred

30、it basis, it will need to have ample cash during the period between when the firm must pay for the raw materials, inventory and labor and when it receives cash from the sales of goods.Cash conversion cycle =4.4.3The length of the operating cycle is the time from the purchase of inventory to the coll

31、ection of cash from the sale of that inventory; this interval is equal to the number of days sales in inventory plus the average collection period.4.4.4 Asset Turnover Ratios4.5 Profitability Ratios4.5 Profitability Ratios4.5 Profitability Ratios4.5 Profitability RatiosHigh net profit margins sugges

32、t a firm can control its costs or has a solid competitive position within its industry that is not threatened by cost-cutting competitors.Firms in industries with high sales volumes (like retail grocery stores) can operate profitably with relatively low net profit margins because they experience a h

33、igh turnover of their total assets, while firms in other industries require much higher margins to survive.4.5 Profitability RatiosROAROA ratios are also affected by the age of a firms plant and equipment, especially during periods of moderate to high inflation.4.5 Profitability Ratios4.5 Profitabil

34、ity Ratios4.6 Market Value Ratios Price/earnings RatioMarket-to-book Value Ratio Earnings per shareEarnings per share=Earnings available to common stockholdersNumber of common shares outstanding4.6 Market Value Ratios Dividend Yield Dividend Payout 4.7 Uses and LimitationsWhile ratio analysis can provide useful information concerning a companys op